Monday, May 23, 2022

Nvidia terminates its $40 billion Arm acquisition

Nvidia has ended its pursuit to acquire Arm from SoftBank Group, according to a company statement.

 “Though we won’t be one company, we will partner closely with Arm,” said Jensen Huang, chief executive officer of Nvidia, in the press release.

Now that the deal has vaporized, SoftBank is preparing Arm for an initial public offering (IPO) within the fiscal year ending March 31, 2023.

Nvidia first announced that it would acquire Arm, a U.K.-based fabless microprocessor designer, from the Japanese Softbank Group for US$40 billion on September 13, 2020. The original deal would have seen SoftBank gain an ownership stake in Nvidia, expected to be under 10 per cent.

The deal was immediately scrutinized by regulators upon its announcement. And since Arm’s business model revolves around licensing its microprocessor designs to other chipmakers, Arm customers worried that the merger would affect their access to Arm’s technologies. Some of its major clients include Samsung, Qualcomm, and Apple.

The biggest blow came on December 2, 2021, when the U.S. The Federal Trade Commission (FTC) sued to block the deal, alleging that the combined firm would stifle competing next-generation technologies.

“Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets, the complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products,” wrote the FTC in a press release.

After two years of being in limbo, rumours that the deal was crumbling began circulating late last month. Bloomberg reported that sources close to the matter said the deal was at a standstill with regulators.

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Jim Love, Chief Content Officer, IT World Canada
Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at IT World Canada. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at tli@itwc.ca.

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